The Australian Prudential Regulation Authority (APRA) has finalised changes to the capital and reporting frameworks for insurance in response to the introduction of the new accounting standard Australian Accounting Standards Board 17 Insurance Contracts (AASB 17).
The changes aim to minimise any regulatory burden caused by a misalignment between APRA's frameworks and AASB 17, while ensuring sound prudential outcomes.
The changes include:
- clarifications of the regulatory capital calculation given the introduction of AASB 17;
- clarifications to enable insurers to use the AASB 17 accounting policies and principles to report financial statement information to APRA;
- additional data reporting requirements to ensure APRA continues to have adequate data for capital assessments and profitability monitoring; and
- updates and clarifications to the Life and General Insurance Capital (LAGIC) framework in order keep it fit for purpose, given the change in industry practices and operating environment over time.
The revised prudential and reporting standards will come into effect from 1 July 2023.
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